Exciting but Uncertain Times

AOP talks to Nyonga Fofang, Director of Bambili Group and AOP Advisory Board Member about the key trends in the African oil and gas economy.

Bambili Group is a private equity firm based in South Africa with pan-African investments and clients.

What are the key trends for the African oil, gas and power sectors in 2018?

Despite recent gains in the oil price, I believe volatility will remain a key feature in the oil and gas sectors for 2018 and the years to come. Predictions vary greatly about how long the oil price will remain above $70 per barrel. The International Monetary Fund, for example, is expecting prices to dip again. For more stability, some OPEC members are saying that additional non-member countries need to sign on to the production cuts. There is also uncertainty around that deal in general — for how long the cuts will be extended and how the deal will be exited without causing shocks to the market when it is time. This year has certainly seen more excitement than we have seen since 2014, but, overall, the industry is clouded with caution. Price uncertainty will be a constant feature in oil and gas conversations for the near-term.

Where do you see the greatest opportunities for the oil, gas and power sectors in Africa?

The frontier exploration areas in Africa are generating a lot of buzz, and for good reason. Countries like Namibia and Uganda, which have seen recent discoveries of oil and gas, are ripe for investors. In addition to positive exploration potential, the countries offer stable regulatory frameworks for investors. On the east coast, Tanzania and Mozambique are still creating a lot of excitement from mega gas finds. The development of these fields and the implications for LNG exports and gas-to-power programs in southern Africa are game changing. These areas and others will provide significant opportunities.

In attracting more investment into the continent, what areas do you believe need the most attention in-order to make Africa more appealing to foreign investment?

In very broad terms, the common complaint about Africa is related to instability of the socio-political environment and the regulatory environment. After that, the regulatory environment must be enabling. Like the issue of political stability, some countries are performing better here than others. Governments should make a concerted effort to make the policies enabling for business will still protecting domestic interests and ensuring transparency for both sides.

Our theme for this year is Energy Coalitions: Are there any prospects for South Africa to expand more within the African context?

Indeed, especially given the increasing energy shortages that South Africa is experiencing. In particular, I see South Africa participating more with its southern neighbors in the realm of electricity and power generation. South Africa is already importing hydropower from Mozambique’s Cahora Bassa Hydro Power Plant via Zimbabwe. There will be additional opportunities for cooperation as Mozambique develops its LNG capacity and South Africa invests in LNG technology.

How important is the role of Africa Oil & Power in reinforcing these themes in the energy sector?

So far AOP has been instrumental in creating a platform where the top leaders in the oil and power industries can come together to discuss these issues. Topics that greatly impact the sector, from funding requirements, the role of key stakeholders, and that of strategic participants within the sector, are always addressed thoroughly at Africa Oil & Power.

What are some topics you are looking forward to hearing about at Africa Oil & Power 2018?

With the growing role of private equity in the sector, I think this is an important discussion at AOP. Private equity has become a pillar of oil and power project financing, and it is very important to hear from both the finance and development side about that new development. The role of government and non-governmental agencies in development the sector is also very important. Finally, I want to hear about the impact of the increasing presence of alternative energy sources on the continent’s power generation plans.

Nyonga Fofang is the Managing Director of Bambili Group, an Africa-focused private equity firm based in Johannesburg. With over two decades of international capital markets experience, Nyonga has been involved in all aspects of private equity investing including mergers and acquisitions, leveraged finance and general management.